Record-high soybean output this kharif season, coupled with a bumper rapeseed/mustard seed crop forecast for the coming rabi season, is set to pull down edible oil prices by five to 10 per cent this oil year (November 2012-October 2013).
The Indore-based Soybean Processors’ Association has estimated output at 12.68 million tonnes (mt) during the ongoing kharif harvesting season, compared to 11.65 mt in the previous year. Similarly, experts have forecast a bumper rapeseed/mustard seed crop for the coming rabi season on favourable climate following late rainfall leaving adequate soil moisture, the basic need for growing rabi crops.
The price cut is set to provide a major relief to Indian consumers, who have been facing rising inflationary pressure from all sides. Edible oil consists of 10-15 per cent of the cost of daily food. Leading the roost, the Ruchi Group of Industries is considering cutting the price of branded products by 5-10 per cent. Other players are set to follow suit. Indian edible oil producers are currently facing a dip in market sentiment due to falling crude palm oil (CPO) prices in major producing countries, including Indonesia and Malaysia. Apparently, in another dampening price sentiment, a massive CPO inventory has been reported in Indonesia, the world’s largest producer.
Indicating the trend, refined soy oil futures for delivery in near-month on the National Commodity & Derivative Exchange (NCDEX) has fallen 14.25 per cent in the last one month to Rs 665.15 per 10 kg. Similarly, soybean futures on NCDEX have also witnessed a steep fall of 17.75 per cent to Rs 3,169.50 per quintal over the last month.
“The Indian edible industry cannot be in isolation being 60 per cent dependent on the world market. Currently, CPO in global markets is lower. Hence, the edible oil price in India may also come down,” said Atul Chaturvedi, chief executive officer of the Adani Wilmer Ltd, producer of ‘Fortune’ brand of edible oil.